Logourl black

Cuker v. Mikalauskas

Supreme Court of Pennsylvania
692 A.2d 1042 (1997)


Facts

PECO is a publicly regulated Pennsylvania utility. A group of minority shareholders demanded that PECO authorize litigation against some of its directors and officers, based on allegations that they had damaged PECO by mismanaging the collection of overdue accounts. Another group of minority shareholders (plaintiffs) filed a complaint against PECO directors and officers, which made the same allegations of wrongdoing. PECO’s board created a special litigation committee to investigate the allegations raised in the demand for litigation and the complaint. Only members of the PECO board who were not named in the demand for litigation or in the complaint acted in creating the special committee, which consisted of three outside directors not employed by PECO. The special committee concluded that there was no evidence of bad faith, self-dealing, concealment, or breach of the duty of loyalty by the directors and officers, and that they exercised sound business judgment and acted in the company’s best interests. The nondefendant members of the PECO board voted to reject the demand for litigation and terminate the action started by the complaint. The lower court denied PECO’s motion for summary judgment, finding that Pennsylvania has not adopted the business judgment rule and that, under Pennsylvania public policy, a corporation lacks the power to terminate a pending derivative suit. PECO appealed.

Rule of Law

The rule of law is the black letter law upon which the court rested its decision. To access this section, start your 7-day free trial of Quimbee for Law Students.

Issue

The issue section includes the dispositive legal issue in the case phrased as a question. To access this section, start your 7-day free trial of Quimbee for Law Students.

Holding and Reasoning (Flaherty, C.J.)

The holding and reasoning section includes:

  • A “yes” or “no” answer to the question framed in the issue section;
  • A summary of the majority or plurality opinion, using the CREAC method; and
  • The procedural disposition (e.g. reversed and remanded, affirmed, etc.).

To access this section, start your 7-day free trial of Quimbee for Law Students.

Here's why 81,000 law students rely on our case briefs:

  • Reliable - written by law professors and practitioners not other law students.
  • The right length and amount of information - includes the facts, issue, rule of law, holding and reasoning, and any concurrences and dissents.
  • Access in your class - works on your mobile and tablet.
  • 11,513 briefs - keyed to 153 casebooks.
  • Uniform format for every case brief.
  • Written in plain English - not in legalese and not just repeating the court's language.
  • Massive library of related video lessons - and practice questions.
  • Ability to tag case briefs in an outlining tool.
  • Top-notch customer support.
Start Your Free Trial Now